In a ho-hum year for U.S. stocks, among the big winners are stocks tied to the recovering housing market. Heading into the week, the broad S&P 500 stock index was up 1.6%, but shares of homebuilders were up 13%, home-improvement retailers were 11.1% higher and home furnishings stocks were 26.1% higher, according to S&P Capital IQ.
Bolstering these shares has been the housing market itself, which continues to heal after last decade’s boom and bust. Housing-related stocks are among the best-performing shares in 2015. The power of the resurgent real estate market to generate positive action in the stock market was illustrated Monday when an early 100-plus-point drop in the Dow Jones industrial average reversed following the best reading on housing builder sentiment since 2005. The Dow finished 68 points higher Monday at 17,545.18.
And in another sign of housing’s positive impact on stocks came early Tuesday when shares of Home Depot jumped 1.1% after it reported a sales and revenue beat for the second quarter and boosted its full-year guidance.
The next data point that could power housing-related shares even higher comes today at 8:30 a.m. ET with the release of July housing starts. Wall Street economists are expecting a month-over-month rise of 1.4% to 1.19 million units on an annualized basis. While that’s below the 9.8% growth in June, it still shows momentum in housing remains strong.
At a time when the U.S. economy is experiencing headwinds from abroad in places like China and Europe, continued strength in the housing market will help deliver a message that investors can’t help but hear loud and clear: Americans are confident enough to pull the trigger on a big purchase like a home.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
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“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”